Congress is currently considering whether to approve a controversial
piece of legislation known as "The American Fisheries Act."
Introduced in the U.S. Senate by Senator Ted Stevens (R-AK) as
S. 1221 and in the House of Representatives by Congressman Jim
Saxton (R-NJ) as H.R. 4180, the bill is ostensibly designed to
rectify a "loophole" in a 1987 federal law that permits
foreign-rebuilt ships to operate in the North Pacific fishery.
Many of these are larger vessels, known as factory trawlers, that
can both catch and process fish. The law in question, "The
Anti-Reflagging Act of 1987," was meant to Americanize U.S.
fisheries by prohibiting foreign-built ships from reflagging as
U.S. ships, thereby circumventing the Americanization policy.
In addition, proponents of S. 1221 also claim that their bill
is a conservation measure designed to halt the overharvesting
of fish in the North Pacific fishery. Joining the environmental
activist group Greenpeace in an unusual alliance in support of
the bill, Senator Stevens has argued that factory trawlers are
catching an excessive amount of fish and must be expelled to insure
the long-term health of America's most productive fishery.

Although S. 1221 proponents are doing their best to convince
the public otherwise, the legislation has absolutely nothing to
do with expelling illegal foreign ships from American waters or
saving a rich fishing ground. It has everything to do with petty
politics and regional parochialism.

This analysis will examine the key environmental and maritime
arguments advanced by S. 1221 proponents. Specifically, this paper
will show that, in asserting that foreign-rebuilt U.S. vessels
should never have been permitted in the fishery, S. 1221's proponents
conveniently ignore the fact that the Anti-Reflagging Act explicitly
allowed these very vessels to enter U.S. fisheries. It will also
show that many in Congress, including S. 1221 proponents, were
fully aware of this fact at the time. A close examination of the
evidence also reveals that the claimed conservation issue does
not exist. The North Pacific fishery is the best managed fishery
in the United States and the factory trawlers, far from being
a menace to the fishery, are among the most environmentally-responsible
vessels.

The real motivation behind S. 1221 appears to be the crass
desire of Alaskan political interests to destroy Washington State-based
businesses for the benefit of commercial competitors, including
Alaskan onshore fish processors which, ironically, are foreign-owned.
If passed, the American Fisheries Act will destroy 1,500 jobs
in Washington State and cost the local economy tens of millions
of dollars. The 18 fishing vessels that would be expelled from
the fishery would become useless, costing the companies that operate
them roughly $500 million. Besides the significant economic harm
that would be inflicted, the American Fisheries Act is also flatly
unconstitutional. It takes the private property of fishing companies
without providing compensation - a clear violation of the U.S.
Constitution's Fifth Amendment.

The Environmental Myth

Of the many myths propounded by S. 1221 proponents, the most
baseless is the claim North Pacific is overfished. They claim
the factory trawlers bear responsibility for this situation, and
should therefore be expelled to reduce overharvesting. Although
they are not traditionally allies, Senator Stevens has teamed
up with the environmental group Greenpeace to make the case that
these 18 factory trawlers are harming the North Pacific fishery
habitat.

Greenpeace asserts that factory ships, which can be nearly
400 feet long and measure more than 4000 gross tons, are too big
and catch too many fish. The group contends that North Pacific
factory trawlers have an excessive amount of bycatch - non-target
fish species that are unintentionally caught and discarded.

Greenpeace also asserts that the trawlers are harming certain
species, the Steller Sea Lion in particular. The group says that
the sea lion population has dropped precipitously in areas near
Alaskan waters where the factory ships operate. By harvesting
so many fish, namely the pollock, the Steller's primary food source
is dropping. This has left the mammals with insufficient food,
says Greenpeace.

Such arguments have been cited by other supporters of S. 1221
and H.R. 4180. Speaking at a June 4 hearing of the House of Representatives
Subcommittee on Fisheries Conservation, Wildlife and Oceans of
the House Resources Committee, Committee Chairman Don Young (R-AK)
asserted that the bill is not about saving jobs in Washington
State but about preserving the North Pacific fishery. Yet, arguments
that the North Pacific is dangerously overfished are completely
unsubstantiated.

The National Marine Fisheries Service (NMFS), the federal agency
responsible for the conservation and management of federal fishery
resources, has emphatically stated that no overfishing is occurring
in the North Pacific. In a September 1996 report, NMFS flatly
rebutted Greenpeace's contention that overfishing is occurring,
saying that Greenpeace "draws erroneous conclusions about
how the North Pacific fishery is managed." NMFS says that
the existing fishery management program has been so successful
over the last 20 years that it has actually led to a growth in
the area's fish population. University scientists corroborate
the NMFS position.

David Fluharty, a professor at the University of Washington
School of Marine Affairs and a member of the North Pacific Fishery
Management Council, states: "By any objective standard, the
claim that the region is overfished is demonstrably false. Concomitantly,
there is no basis for believing that at-sea processors or any
other sector of the fleet is engaged in overfishing... Based on
the best available scientific data... it is clear that the fishery
for Walleye Pollock is one of the largest fisheries in the world
and among the cleanest in terms of bycatch."

The North Pacific fishery is also the healthiest fishery in
the United States.

Of the seven major fisheries around the United States, the
North Pacific Fishery is the only one with no overfished species.
All 63 species that are harvested are harvested within limits.
This compares favorably to New England, where there are 12 overfished
species, the Mid-Atlantic with 5, the South Atlantic with 14,
the Gulf of Mexico with 4, the Pacific Coast with 13 and Hawaii
with 26.

There are several reasons for the North Pacific's healthy fish
stocks. To begin with, government and university scientists carefully
calibrate the amount of fish that can be safely harvested each
year. In establishing the catch limit, the food needs of marine
mammals, like the Steller Sea Lion, are taken into account and
the catch level is reduced by a corresponding amount. Furthermore,
current harvest levels are set at only two-thirds of the allowable
catch limit. Thus, in 1996, the overall harvest quota for Alaska
groundfish totaled about 2.2 million tons even though fishery
scientists determined that 3.3 million tons could have been safely
harvested.

Contrary to Greenpeace's claims, NMFS also says that the marine
mammal populations are not adversely affected by fishing. As already
stated, the food needs of these mammals are considered in establishing
catch limits; the population levels of the pollock, the Steller
Sea Lion's main food source, are at comfortably high levels. Fishery
regulations also prohibit factory trawlers from fishing near crab,
sea lion and walrus habitats. NMFS reports there is little interaction
between marine mammals and trawl fishing ships, and that entanglement
in trawl gear is not a factor in mammal mortality.

Greenpeace frequently asserts that factory trawlers waste a
large number of fish in comparison to other American fisheries.
What Greenpeace fails to take into account is that, because the
North Pacific fishery is so healthy and abundant, total discard
levels will necessarily be large when compared to other fisheries
like New England's. It is important to bear in mind that the North
Pacific fishery accounts for 45% of the total U.S. fish harvest.
As for Greenpeace's claim that the trawlers waste or discard an
excessive amount of unwanted fish, the facts say otherwise. In
reality, the discard rate of North Pacific fishers is 15%, well
below the worldwide average of 25%. Most significant of all, the
discard rate of the large factory trawlers is the lowest of any
North Pacific fishing vessel - three percent.

Upon careful investigation, the factory trawlers are found
to be the most environmentally safe of all fishing vessels. Federal
fishery observers are on board all factory trawlers, including
the 18 factory trawlers targeted by S. 1221, to enforce catch
limits and collect scientific data. At-sea processors are in full
compliance with the law and report their catch on a weekly or
even daily basis. There is certainly no incentive for factory
ships to catch more fish than they need as any fish discarded
counts against the quota limit. NMFS observes, "It is our
understanding that vessel size is not a key factor in explaining
why boats overfish the resources. Nor are large boats disproportionately
responsible for bycatch problems." The rebuilt factory trawlers
are large because they contain processing facilities and living
quarters for the crew. Their actual fish harvest is often less
than that of smaller vessels that only catch fish.

Ironically, banning some factory trawlers as S. 1221/H.R. 4180
seeks to do would make it significantly more difficult for the
government to monitor and enforce catch limits because many smaller
vessels are not required to carry federal fishery observers. Government
inspectors cannot be placed on each of these vessels.

This brings up one of the most glaring flaws in S. 1221/H.R.
4180's supposedly pro-conservation goals. Even if the 18 factory
trawlers were banned, the number of fish harvested would remain
exactly the same because other boats and processors would simply
replace the rebuilt factory ships. That is also the official view
of NMFS: "In the North Pacific, we would expect the fishing
capacity of the remaining vessels to increase relatively quickly
(within one or two years) to replace fishing capacity that is
removed by S. 1221."

This is the unspoken little secret behind the American Fisheries
Act. The bill is not about saving fish - overwhelming evidence
proves otherwise. It is about reallocating business from certain
Washington-based seafood companies to their competition, including
Alaskan on-shore processors. Said Frank Bohannon, a proponent
of S. 1221: "United Catcher Boats would like to go on record
stating that the fish freed up by the removal of foreign vessels
be allocated to the U.S. fishing fleet."

As will be discussed later, those "foreign" vessels
are actually U.S.-flag vessels operated by American companies
and manned by American crews. However, what these facts show is
that proponents of S. 1221 and H.R. 4180 must resort to distortions
about the factory trawlers' environmental record to drive out
of the North Pacific fishery the more effective fishing companies.
Says Ron Sims, county executive of Washington's King County, "[S.
1221's] main effect would be to exclude about one-half of the
boats that currently fish in these waters to the benefit of the
other half." The environmentalists definitely don't believe
S. 1221 will accomplish any significant conservation benefit by
itself. Their agenda is simply to start picking off fishing interests
one at a time since they are categorically opposed to fishing
by anybody - whether by factory trawlers or small boats. Apparently,
environmentalists hope that S. 1221 would set a useful precedent
for expelling other fishing vessels.

Commenting on the boats that would take over from the factory
trawlers, one environmental witness said at a hearing: "The
Alaska-based catcher boats, and others active in the fisheries,
do contribute to many of the environmental problems facing the
North Pacific, including overfishing, bycatch, localized depletions
and damage to habitat... [and] remain targets of our long-term
campaign, despite the fact that some of them support S. 1221."

The Anti-Reflagging Act of 1987

When Senator Stevens introduced the American Fisheries Act
on September 25, 1997, he argued that the bill was necessary to
reduce an overcapitalization of the North Pacific fishery. Overcapitalization
essentially means that there are too many companies competing
in the fishery. Leaving aside for the moment why it is even the
business of Congress to dictate the capitalization level in any
industry, S. 1221 proponents claim that this excessive competition
resulted from a misinterpretation of the Anti-Reflagging Act of
1987 that allowed several U.S. factory ships that had been rebuilt
overseas into American fisheries.

The Anti-Reflagging Act, passed by Congress in 1987 and signed
into law soon after by President Ronald Reagan, was designed to
Americanize U.S. fisheries by prohibiting foreign-built ships
from reflagging as U.S. ships - thus skirting the Americanization
policy. It represented the culmination of a series of legislative
proposals, beginning with the Magnuson-Stevens Act in 1976, to
gradually eliminate foreign-flag fishing for the benefit of American
fishermen. In 1987, foreign-flag vessels were processing nearly
90% of the fish in the North Pacific fishery. Because of the Magnuson-Stevens
Act, the Anti-Reflagging Act and other legislation, foreign-flag
harvesting and processing vessels had been virtually eliminated
and replaced by U.S.-flag vessels by the early 1990s. By all measures,
these laws achieved their objectives. U.S.-flag vessels dominate
the North Pacific fishery and investment in U.S. fishing boats
and processors (that is, factory trawlers) has dramatically increased.

One point, however, needs to be emphasized. When Congress passed
these laws, "Americanization" meant U.S.-flag vessels,
employing American crews, owned by American companies, paying
taxes to the U.S. Treasury and complying with all U.S. labor,
immigration and environmental laws. Americanization did not mean
that stockholders in these companies had to be U.S. citizens.
Nor did it mean that U.S.-built ships that underwent rebuilding
in foreign shipyards could not enter American fisheries as U.S.-flag
vessels.

However, S. 1221 proponents claim that the 18 U.S.-built factory
trawlers that were rebuilt in foreign shipyards and entered the
North Pacific fishery in the years immediately following the passage
of the Anti-Reflagging Act should not have been allowed because
they were, in fact, foreign ships. Senator Stevens asserts that
the U.S. Coast Guard misinterpreted the intent of the Act by allowing
foreign-rebuilt boats to be designated as U.S.-flag vessels. Stevens
went so far as to accuse the Coast Guard of unethical conduct
in the manner in which it evaluated the ships in question.

To rectify this supposed deceit, S. 1221 expels most foreign-rebuilt
U.S.-flag ships from the North Pacific fishery. This is accomplished
by retroactively repealing the grandfather clauses of the Anti-Reflagging
Act by which the foreign-rebuilt ships were admitted into the
American fishery. One grandfather clause specifically allowed
a foreign-rebuilt U.S. ship to enter the North Pacific fishery
if the ship had been purchased by July 28, 1987, entered a foreign
shipyard contract within six months of the passage of the legislation
(January 11, 1988) and was redelivered to the owner by July 28,
1990. Ultimately, 22 foreign-rebuilt ships were allowed into the
U.S. fishery under the grandfather clause. If S. 1221 is approved,
to continue fishing in the North Pacific, corporations operating
the formerly grandfathered boats would have to meet a new standard
of 75% American ownership instead of the previous standard of
50%. Boats failing to meet the ownership standard within 18 months
of the bill's enactment would be expelled.

Another provision expels grandfathered boats greater than 165
feet in length that measure more than 750 tons and are equipped
with a 3000-horsepower engine. The only way a company can keep
a vessel of this size after the same 18-month period is if it
scraps a comparable-sized U.S.-built fishing vessel. Thus, in
addition to forcing owners to sell anywhere from a 25% to 75%
stake in their companies to U.S. citizens, S. 1221 places owners
in the economically-impossible position of having to permanently
discard one-half of their fleet, assuming their fleet contains
comparable vessels, in order to continue fishing. If a vessel
of comparable size does not exist, the fishery endorsement of
the foreign-rebuilt ship is revoked immediately. An endorsement,
which will be discussed in more detail later, is the legal principle
that qualifies a vessel to perform its intended function.

The bill's real purpose is made starkly clear, however, by
the classic catch-22 dilemma it forces on affected companies.
Although S. 1221 appears to give owners 18 months to comply with
the new citizen ownership provision, the bill states that any
ship that has a significant change in ownership after September
25, 1997 automatically loses its fishing endorsements. In other
words, S. 1221 requires factory trawlers to be 75% American-owned,
but when a company meets the new ownership requirement the vessel
may no longer be used in the U.S. fisheries anyway. As a Seattle
Times editorial stated, "The goal is to drive boats out of
business... Stevens is simply and crudely trying to ferret out
the most efficient elements of the market in favor of regional,
parochial interests."

This crude assault on a flourishing industry certainly marks
another low in the politics of regional parochialism and special
interest scheming. What really distinguishes S. 1221 for its brazenness,
though, is that proponents, namely Senator Stevens, have falsely
claimed that they were deceived when foreign-rebuilt ships were
admitted into the fishery. In fact, they knew from the beginning
that the "Anti-Reflagging Act of 1987" - a bill Stevens
helped write - was designed to allow certain U.S.-built, foreign-rebuilt
ships into the fishery.

When the Anti-Reflagging Act was being crafted, it was widely
known among Members of Congress and the Senate and their staffs
that dozens of ships were being rebuilt in foreign shipyards.
Between July and November 1987, shipyard interests circulated
several lists to House and Senate staff identifying 36 to 100
vessels that were the subject of overseas conversion plans. These
lists were quite detailed. Members involved in developing the
legislation were made aware of the number of the vessels being
rebuilt, the identity of the vessels, the country in which the
work was taking place, the type of rebuilding, the extent of rebuilding
and the estimated cost of the conversion. In several instances,
the ships were described as having 80% to 90% of their original
structures rebuilt. For example, a list distributed in August
1987 described 15 vessels in foreign shipyards. One of the vessels,
the Snow King, was listed as being in Norway and having a "complete
rebuild of superstructure, repower and conversion to trawler processor"
at a cost of $14 million. Another vessel, the Northern Hawk, a
340-foot boat, was having 90% of its structure rebuilt in a Norwegian
shipyard. The Northern Hawk is one of the grandfathered vessels
targeted by S. 1221. Yet, Congress was made aware of its foreign
conversion in Senate hearings eight months before Congress approved
the Anti-Reflagging Act. Clearly, Congress knew when it was debating
the Anti-Reflagging Act that small fishing vessels were being
rebuilt in foreign shipyards, and that many of these foreign conversions
involved dramatic overhauls of the ships. It is important to note
that the legislative history does not reflect any attempt to either
halt or to limit the size of the foreign rebuilding projects.

These details are important because now S. 1221 proponents
have made much out of the fact that the ships allegedly were rebuilt
larger than Congress contemplated. At a June 1998 House hearing,
Senator Stevens displayed large photos showing that some boats
were dramatically transformed into significantly larger ships
- as if this were a surprise. Yet, such projects were well known
in 1987 when the original bill was pending.

Congress did not want to limit foreign conversions for a reason
that Senator Stevens and other S. 1221 proponents are almost certainly
aware. In 1987, our national policy was to encourage foreign investment
in the U.S. fishing industry as a way to increase domestic fish
processing capacity in the North Pacific. Thus, it is not surprising
that Congress chose to legislate a window of opportunity for foreign-rebuilt
vessels to enter American fisheries and allow stockholders in
the owning companies to be foreign.

Of the four bills introduced in 1987 addressing reflagging,
not one contained a provision requiring that rebuilding take place
in U.S. shipyards. This included S. 377, a bill introduced by
Senator Stevens. In a hearing on that bill, a significant majority
of the witnesses stated their opposition to imposing any citizen
ownership requirements on U.S.-flag vessels.

Senator Stevens and his Commerce Committee colleagues were
informed in the 1987 hearings that there was a major need for
foreign capital investment in the North Pacific fishery. At the
time, U.S. processors had the ability to process only 10% to 15%
of the North Pacific groundfish, with the rest processed by foreign-built,
foreign-owned and foreign-flag vessels. Witnesses told the Committee
that the domestic fish industry was not making the necessary investments.
Fish processors likewise told the House Merchant Marine and Fisheries
Committee that "reliance upon foreign capital investment
in the fishing industry is necessary for the foreseeable future."
One industry official provided Congressman Young with 21 examples
of American fishermen and processors who were unable to obtain
domestic financing for their conversion projects.

This history is important because Senator Stevens, Congressman
Young and other S. 1221 proponents have attacked the Coast Guard
for allegedly flagrantly misinterpreting congressional intent.
During hearings on the Anti-Reflagging Act, Congressman Young
directly asked Coast Guard officials about the legality of the
foreign rebuilding that was then occurring in European and Asian
shipyards. The Coast Guard responded that such foreign conversions
were perfectly legal - a view strongly seconded by the Reagan
Administration. Speaking for the Department of Commerce, James
Douglas stated: "We do not believe foreign investment has
presented any problems in conservation or management of our fishery
resources... good and positive developments include foreign investment
in fish harvesting, tendering and processing vessels by both foreign
and domestic entrepreneurs. We welcome that investment."

Under the plain language of the rebuilding grandfather clause
of the Anti-Reflagging Act, the Coast Guard ruled that the foreign-rebuilt
vessels were "old" U.S. vessels, not "new"
foreign vessels. Following 200-year-old maritime precedent, the
Coast Guard held that a vessel is only new if: 1) Its hull and
superstructure are constructed entirely of new materials or 2)
It is remade from material of an existing vessel so extensively
refabricated as to be unidentifiable as vessel parts. Essentially,
a rebuilt vessel will not be considered "new" if it
retains only a relatively small portion of the original hull or
superstructure. The reason for this tough standard is to protect
crewmembers, contractors and lenders, all of whom rely on the
vessel as their collateral. Without this tough standard, a modest
amount of shipyard work could change the identity of a vessel,
thus allowing an owner to escape his obligations to pay crewmen
and marine suppliers who worked on the original vessel. This strict
interpretation also prevents foreign vessels from circumventing
the Magnuson-Stevens Act - the chief concern of S. 1221 proponents.
It is ironic that Senator Stevens and Congressman Young have publicly
castigated the Coast Guard for adhering to this long-standing
position. Were it not for the Coast Guard's interpretation, a
foreign trawler could undergo a modest amount of work in a U.S.
shipyard, which would make it American-built and thereby allow
it to enter domestic fisheries.

Despite current protestations that Congress somehow was unaware
of this long-standing precedent, the record shows that the Coast
Guard's foreign-rebuilding policy was fully explained to Senate
Commerce Committee staff in 1987. Moreover, Senator Stevens himself
seemed to understand the precedent when he stated on the floor
of the Senate shortly before the Anti-Reflagging Act passed, "current
vessel documentation laws allow a U.S.-built vessel to be almost
entirely rebuilt in a foreign shipyard while still retaining the
primary processing preference."

That is why it is perplexing that Senator Stevens reversed
his position in 1998 and asked the General Accounting Office (GAO)
to conduct an investigation of the Coast Guard, claiming it had
misinterpreted the Anti-Reflagging Act by permitting the entry
of foreign-rebuilt U.S. ships. On July 16, the GAO released a
report validating the Coast Guard's interpretation. Why Senator
Stevens needed a GAO investigation to tell him what he already
knew is simply mystifying.

Of equal significance, Congressman Young explicitly recognized
the need to protect the property rights of ship owners engaged
in foreign conversions. After making reference to the Senate's
desire for an earlier cutoff date for allowing foreign-rebuilt
U.S. ships to enter the North Pacific fishery, Young stated that
the House chose "July 28, 1987 as a cutoff in order to avoid
any semblance of a taking of a vessel owner's privileges under
law." This is surprising because at the June 1998 House hearing
on these issues, Congressman Young emphatically dismissed concerns
voiced by fellow Members that the bill violated property rights.

If it wasn't right, in Congressman Young's opinion, to take
a company's vessels in 1987, what makes it right to take those
same vessels in 1998?

Property Rights

While S. 1221 proponents may believe they can be cavalier with
property rights, the Constitution says otherwise. The Fifth Amendment
states "nor shall private property be taken for public use,
without just compensation." The Fifth Amendment's guarantee
of just compensation prohibits government from forcing some individuals
to bear disproportionate public burdens which should be borne
by the public as a whole.

In the case of S. 1221 and H.R. 4180, a few private companies
would be forced to bear a devastating economic burden for something
that does not even further a legitimate public purpose. The provisions
of these bills will render the ships operated by the affected
shipping companies useless and valueless.

In addressing the property rights issues raised, it is important
to understand that ships have a unique legal identity. They enjoy
rights, privileges and entitlements that other types of property,
such as automobiles, do not. Once a vessel gains its qualification
- or endorsement - to engage in a trade like fishing, that endorsement
follows the vessel no matter who owns it. A vessel's endorsement
is an inherent characteristic of the vessel itself, describing
what it can and cannot be used for. Furthermore, the endorsement
is not like a permit, which applies only to the individual permittee.

In applying the Anti-Reflagging Act, the Coast Guard has consistently
held that foreign-rebuilt ships kept their original fisheries
endorsements through changes of ownership. In addition, vessel
documentation laws focus only on the citizenship of the owning
entity, be it an individual or corporation. The citizenship of
the investors in a U.S. corporation is not relevant in determining
the documentation of the vessel. When Congress passed the Magnuson-Stevens
Act and the Anti-Reflagging Act, there was never any question
that U.S. corporations that were majority-owned by non-citizens
should be treated differently from any other U.S. company in providing
access to fisheries.

The courts have upheld the Coast Guard's long-standing interpretation
of fishery endorsements running with a vessel. In 1990, the Southeast
Shipyard Association filed a lawsuit in federal court claiming
that, under the provisions of the Anti-Reflagging Act, the foreign-rebuilt
ships should have lost their fishing endorsements when they changed
ownership. In 1992, the Court of Appeals for the District of Columbia
rejected the claim and unanimously ruled for the Coast Guard.

Denying the 18 factory processors their endorsements would
destroy $500 million worth of shipping assets. Contrary to the
claims of S. 1221 proponents, it is not a simple matter of the
companies transferring the ships to other locations or selling
them at market value. Several factors prevent these vessels from
fishing elsewhere in the world. To begin with, the affected ships
are U.S.-flag vessels, which automatically prohibits them from
fishing in the territorial waters of many nations. Second, the
non-U.S. fisheries where the ships could operate simply lack the
type and volume of fish that would make fishing economically feasible
for these types of ships. These 18 vessels were custom-rebuilt
for fishing in the North Pacific fishery and for processing certain
fish products like surimi, a fish paste used in making artificial
crab legs and other seafood products. Highly specialized and designed
for use in the North Pacific pollock fishery, there is no other
use for these vessels. Without the fishery endorsement, the vessels
have no value. Hence, there is no merit to the claims of S. 1221
proponents that the companies can just sell the ships. There would
be no buyers because a potential owner would not regain the fishery
endorsement with the purchase. About the only thing the ships
could be sold for is for scrap metal.

Depriving fishing companies the use of their ships without
compensation is clearly a taking under the Fifth Amendment. A
number of legal experts concur. Former U.S. Attorney General Dick
Thornburgh stated: "...the endorsements represent a valuable
property right that in no wise can be construed as property of
the government. The endorsements run with the vessel; they are
not personal to the vessel's owner in the nature of a revocable
license. Once endorsements are issued they become a part of the
bundle of rights that run with the vessel... By revoking the endorsement
Congress will deprive the vessel owners of these property interests."

Stephen Saltzburg, a professor at The George Washington University
Law School, observes that S. 1221 does not serve a legitimate
public health or safety issue, but rather is directed at protecting
a narrow economic interest. Saltzburg states: "The fact that
1221 would eliminate the right of a corporate owner to continue
to operate certain fishing vessels, unless extremely onerous conditions
are met, particularly when a previous Congress thought it was
guaranteeing such right (emphasis added), seems to meet the prong
of the regulatory takings character of the government action."

In addition to the blatant nature of the takings, Professor
Saltzburg observed that Congress was sensitive to property rights
violations when crafting the Anti-Reflagging Act. He found it
noteworthy that Congressman Young supported the July 28, 1987
cutoff date for entering into foreign conversion contracts for
American ships "to avoid any semblance of a taking of a vessel
owner's privilege under law."

These and other legal experts conclude that under S. 1221 or
H.R. 4180, the government would be taking property without just
compensation under the Fifth Amendment, thereby setting the stage
for a barrage of costly lawsuits by aggrieved property owners.
Whatever may be the outcome of litigation resulting from S. 1221,
one thing is certain: It would mean the destruction of thousands
of jobs and a thriving industry in the Pacific Northwest.

The bill would cost the companies that own these vessels hundreds
of millions of dollars and eliminate at least 1,500 jobs. Senator
Patty Murray (D-WA) wrote in a letter to Senate Commerce Committee
members that "7,500 family wage jobs in the Pacific Northwest
and Alaska" would be negatively affected by the American
Fisheries Act. The typical at-sea processor earns an average of
$24,000 to $30,000 for six to eight months of work. By comparison,
the average salary of an onshore processor is less than $9,000
a year.

The business that the factory trawlers generate for the Seattle-area
economy is considerable. M.R. Dinsmore, executive director of
the Port of Seattle, says that the processors spent $15 to $20
million in Puget Sound shipyards in 1997. In addition, Dinsmore
says hundreds of other local businesses such as electronics manufacturers,
fuel suppliers, airlines and packaging manufacturers derive a
substantial portion of their revenue from the factory trawler
fleet.

The Ports of Puget Sound have invested millions of dollars
in developing the infrastructure to support the processor boats.
The Port of Seattle, for instance, is investing more than $40
million to build new piers to support large fishing vessels. Dinsmore
points out that "with the downturn in many Asian economies
on which our region relies heavily, jeopardizing the sizable economic
benefit of at-sea processors" would only further hurt the
local economy.

Contractors and subcontractors who have developed profitable
business ties with the at-sea processing companies have written
several letters to Congress detailing how S. 1221 will seriously
harm or even ruin their businesses. Said one official with Unitor,
a ship supply company, "During certain months of the year,
the business that is generated from these trawlers comprises more
than 60% of our monthly sales. We depend so heavily upon their
business that some of the current staff would have to be let go
should there no longer be a business base that the fleet supports."
A marine insurance company official wrote that if S. 1221 passes
"the U.S. government would be pulling the rug out from under
people who have built and operated their businesses totally in
compliance with the laws of the United States." The AFL-CIO
has also stated its opposition to the bill, noting that "many
of the shipyard jobs are union family wage jobs" and that
it "would be a shame to hurt these workers based solely on
the fact that someone dislikes fishing vessels over 165 [feet]
in length."

Conclusion

The AFL-CIO statement sums up the merits of the American Fisheries
Act. Designed to correct non-existent problems, the legislation
manufactures trivial criteria that the targeted fishing companies
cannot possibly meet - the sole purpose of which is to run them
out of business. The fishery isn't being overfished, as proponents
claim; the very federal agency charged with managing the fishery,
the National Marine Fisheries Service, reports that the fish population
has remained healthy over the last 20 years. Neither is the North
Pacific fishery overharvested; in fact, it is deliberately underharvested
and is the only American fishery without a single overfished species.
Likewise, there is no basis for the claim that the factory trawlers
are foreign vessels that were wrongfully admitted into domestic
fisheries. Senator Stevens and his colleagues and staff knew in
1987 that foreign-rebuilt ships were being admitted into the fishery.
Far from being deceived by the Coast Guard, as they now indignantly
assert, they were well aware of the policy and its legality back
in 1987. The legislative record indicates that Senator Stevens
even agreed that there was nothing illegal about admitting foreign-rebuilt
ships. Arguments by S. 1221 proponents that they were deceived
about the size of the rebuilt ships are also belied by the facts.
Again, members of Congress were well aware of the number, identity
and the extent of the overhaul for vessels that were being rebuilt
or could be rebuilt under the grandfather provisions of the Anti-Reflagging
Act.

All along, Senator Stevens has asserted that his purpose in
expelling the factory trawlers is to Americanize the fishery.
Although the companies that own the trawlers are American, many
of the stockholders are Norwegian. Yet Stevens's claim is hard
to take seriously. A considerable amount of the business created
by the trawlers' expulsion would go to Alaska's on-shore processors.
The processors are 75% owned by Japanese companies. In the final
analysis, that is what the American Fisheries Act is really all
about: Creating business for Alaska by destroying jobs in Washington.
The only conclusion that can be drawn is that the American Fisheries
Act is special interest politics of the narrowest and crassest
sort.

# # #

John Carlisle is director of the Environmental Policy Task
Force of The National Center for Public Policy Research. Comments
may be sent to John
[email protected]